EUROPEAN stocks fell last Friday, sending the Dow Jones Stoxx 600 Index to a three-year low, as record oil prices hurt auto makers and airlines and concern deepened Fannie Mae and Freddie Mac are short of capital. The UK's FTSE 100 Index entered a bear market.

Daimler AG, the world's second-biggest luxury car maker, and Air France-KLM Group declined as crude climbed to US$147.27 a barrel. Credit Agricole SA dropped the most since 2002 after people familiar said Chief Executive Officer Georges Pauget may resign this week. The Stoxx 600 Banks Index slumped to a five-year low on speculation the United States government may have to rescue the nation's largest providers of financing for home loans, Bloomberg News said.

"There's panic in the market concerning Fannie Mae and Freddie Mac and the oil price just reached another record, which also weighs on the market," said Carsten Klude, Hamburg-based chief investment strategist at M.M. Warburg & Co.

The Stoxx 600 lost 2.7 percent to 270.36, the lowest since June 6, 2005. The index fell 3.3 percent last week, capping its sixth straight weekly drop, the longest losing streak since January.